Chinese President Hu Jintao (胡錦濤) can return home from the G20 summit confident of having delivered on China’s goal of seeing developing nations gain a seat at the table of global economic policy.
Hu went into the summit on the world crisis calling for reform of a world economic order that China sees as dominated by developed Western countries through the G7 rich nations’ club and international financial institutions.
A summit communique made clear that voice had been heard, spelling out the grouping’s intention to take the developing world more into account.
“The most substantial change has been obviously the recognition that developing countries like China need to have more representation, and its an acknowledgement of that,” said Shanghai-based Andy Xie (謝國忠), former chief economist in Asia for Morgan Stanley.
Among the harbingers of change were China’s unprecedented promise to contribute US$40 billion to the IMF, which Xie said should increase Beijing’s voting powers in the multilateral body.
The summit communique also pledged to undertake “representation reforms” in global financial institutions.
These would include a “transparent and merit-based process” of appointing leaders to the IMF and World Bank, which have traditionally been chosen by Europe and the US.
“Emerging and developing economies, including the poorest, must have greater voice and representation,” the communique said.
China’s state-run media yesterday celebrated what British Prime Minister Gordon Brown, the summit’s host, called the start of a “new world order.”
“This is the first time that developed countries were not the sole guiding force. Emerging market countries got the chance to participate in a summit on formulating and revising global rules,” a Beijing Youth Daily commentary said.
The China Daily said in an editorial that the summit’s outcome “would have been unthinkable just a few years ago, as unilateralism seemed to be the dominant theme in international relations.”
China failed in its wish to see the summit discuss Chinese central bank Governor Zhou Xiaochuan’s (周小川) recent call for the US dollar to be replaced as the global reserve currency with a standard run by the IMF.
But China’s state-run Xinhua news agency said it had still raised hopes of a deserved bigger role for developing countries so they do not have to accept “prejudiced” decisions made by more powerful nations.
Despite the summit’s symbolism, some economists see little practical change, noting that global financial institutions continue to be overwhelmingly dominated by rich nations.
“You’ve got a club of nations saying it will pay attention to those outside the club, but so far the club’s structure has not changed,” Xie said.
“I don’t expect any practical impact on the developing world. This was more like a dance between China and the US,” he said.
Michael Pettis, a finance professor at Peking University, said the divide between the developed and developing world recede in importance in the years ahead, but because the US-China relationship would increasingly dominate.
He said the idea of a unified bloc of emerging markets was a fallacy, given deep policy differences between many of them.
“Everyone knows the most important meeting at the G20 was between Obama and Hu,” he said.
Nevertheless, South African President Kgalema Motlanthe said in London that his country, the only African nation in the G20, was “quite pleased with what came out of this summit.”